Bloomberg has an interesting article discussing two types of Chinese new cities:
In 1979, Deng Xiaoping drew a circle on the map around China’s southern coast and created Shenzhen, an experiment in capitalism, according to a popular ode to the former leader.
Nearly four decades later, Xi Jinping unveiled his own ambition for an era-defining city, this time perched on the outskirts of Beijing. Xiongan was billed as a gleaming, high-tech metropolis that would serve as a release valve for the crowded Chinese capital — “a model city in the history of human development.”
Thus far, the Shenzhen experiment has been far more successful. Over the past 40 years, Shenzhen has gone from being a mostly rural area with a few factories making cheap labor-intensive export goods, to become a bustling city of 17.5 million, considered China’s Silicon Valley. In contrast, Xiongan has gotten off to a slow start:
When Bloomberg visited on a weekday this month, a highway into the city was almost empty. In the city center, few shops and restaurants were open on streets lined with brand-new government headquarters, office buildings, residential compounds and hotels.
The other important difference is that Shenzhen grew organically on land right across the border from Hong Kong, as firms rushed in to take advantage of a “special economic zone” that allowed private enterprise that was still restricted in much of the rest of mainland China. Xiongan is also in a great location (right next to Beijing), but is a centrally planned project:
Unlike Deng’s laissez-faire approach that led to Shenzhen’s disorderly but colossal growth, Xi has opted for meticulous planning to help his city avoid problems dogging other areas.
The city is being selective about which industries it welcomes, encouraging companies working in information technology, biomedical and new energy sectors and eliminating what it calls traditional industries. That’s unlike Shenzhen’s free-wheeling approach that attracted millions of migrant laborers and entrepreneurs.
A museum dedicated to the city’s development touts how it has been centrally planned.
Jane Jacobs would not have been a fan of Xiongan:
Big cities’ appeal often lies in their organic street life, said Covell Meyskens, an academic who has written about government planning in China. “Planned smart cities are supposed to be the place of the future,” he added, but without those human trappings “nobody wants to live there.”
South Korea’s Songdo has similar problems:
The authorities of South Korea decided to build a fantastic city of the future on the shores of the Yellow Sea. The country’s government has signed a cooperation agreement with major investors and construction companies to create a project for a huge seaside city called Songdo. More than $ 40 billion was spent on the construction of the world’s first “smart” city, but now Songdo looks more like an abandoned settlement than a busy metropolis.
Futuristic Songdo was supposed to be the first “smart” city on the planet, which was planned to be created from scratch.
It should be noted that some Chinese “ghost cities” did eventually fill up with new residents, as hundreds of millions of people moved from the countryside to the city. Nonetheless, there is reason to worry about over-investment in Chinese real estate. Throughout East Asia, birth rates are plunging to very low levels. In addition, younger people in that region increasingly prefer to live in the very largest and most sophisticated cities—to an even greater extent than in the US or Europe. China’s government might eventually be able to populate Xiongan if they move enough government offices there from nearby Beijing, but many of China’s second and third tier cities face the prospect of extensive overbuilding.
PS. Hundreds of years ago, there was a continual flow of people from rural to urban areas, to repopulate cities decimated by plagues. In the next few decades, there’ll be a continual flow of people from the higher fertility rural areas to repopulate cities decimated by ultra-low birthrates:
Of all of South Korea’s major cities, Seoul has the lowest birthrate of 0.59.
READER COMMENTS
Richard W Fulmer
Jan 13 2024 at 2:21pm
On March 9 2020, Russ Roberts hosted Richard Davies, the author of Extreme Economies, on EconTalk. One of the stories that Davies told was of two UN-run Syrian refugee camps in Jordan.
Zaatari, the first camp, was built quickly in response to the Syrian refuge crisis and before the UN was able to “get it right” by their lights. The camp was built near a Jordanian town, allowing trade to occur. In addition, the Syrians were able to buy goods at the camp’s UN stores with their UN-issued debit cards and sell those goods to Jordanians for cash. The currency enabled them to create a thriving, money-based economy in the camp. All sorts of businesses sprang up – food, hardware, and even wedding dress stores. Over 60% of working age adults were employed and the community was vibrant and growing.
Unfortunately, freedom led to inequality. Some people got relatively wealthy, and some used their wealth to add onto their UN-supplied homes. Naturally, the UN found this inequality to be unacceptable.
By the time the UN built Azraq, the second camp, they had learned their lessons. Azraq was built in the middle of the desert and was surrounded by armed guards. As a result, no external trade was possible. Unemployment was over 90%, and the camp was made up of drab, identical homes populated by people of identically low wealth.
Strangely, Syrian refugees were desperate to be sent to Zaatari, despite its inequality, rather than to Azraq, the UN’s egalitarian utopia. Silly refugees.
Jim Glass
Jan 13 2024 at 4:22pm
Nonetheless, there is reason to worry about over-investment in Chinese real estate…
“Three billion”… cough, ahem.
Scott Sumner
Jan 14 2024 at 2:27am
Don’t believe everything you read, but believe this:
Three billion is a ridiculous estimate.
David S
Jan 14 2024 at 3:07am
I frequently come across videos of blocks of high rises getting blown up in parts of China, which I’m sure that some people will use as evidence for a massive real estate bubble. While I’m sure that there have been some bad business decisions in recent years, I also doubt there is a massive oversupply of housing in that country. What seems to be happening is that Xi is pursuing a “semi-tight” monetary policy in an effort to solve some of the malinvestment in housing construction and restore moral vigor to his country. I suppose we also shouldn’t doubt his divine wisdom when it comes to the creation of Xiongan.
I didn’t know about Songdo until you mentioned it in this article–it is another demonstration of how all the bad ideas espoused by the early Modern architects and urban planners still have a hold on politicians. They enjoy riding in motorcades down those broad avenues to the ribbon cutting ceremonies for gleaming skyscrapers designed by boutique architecture firms.
Scott Sumner
Jan 14 2024 at 12:32pm
Yes, real estate prices are extremely high in the popular big cities—it’s the smaller cities where the overbuilding has occurred.
Arqiduka
Jan 14 2024 at 4:18am
Right now China and much of the world is overpopulated in the economic sense, and population must fall.
When its done falling, and in the unlikely scenario that fertility doesn’t automatically pick up, some sort of control over who get to move to cities may need to be considered.
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